Article 593/2 of the new Turkish Commercial Code No.6102
regarding shares of capital stock provides that, "shares of
capital stock shall be issued as proof or as registered
shares." This article suggests that issuance of share
certificates will be possible for limited liability companies.
However, the rationale for this article states that share
certificates would not provide ease of transfer or circulation for
the shares of limited liability companies. Thus, it is apparent
that the legislator does not intend to provide a security nature to
the share certificates of limited liability companies.
In Article 484 and the subsequent articles of the new Turkish
Commercial Code No.6102, share certificates issued by joint stock
companies are considered under the section "Securities".
It is provided in the said articles that ownership transfer in
joint stock companies would-be possible by the transfer and
endorsement of the possession of the share certificates; which
underlines the "security" nature of such share
certificates. On the other hand, the new Turkish Commercial Code
No.6102 does not include any provisions stipulating any security
nature for share certificates of limited liability companies. To
the contrary, as described above, when the rationale for Article
593 of the Law is concerned, the legislator clearly underlines that
it has no intention to provide limited liability company shares a
security nature by stating that share certificates in limited
liability companies will not provide any ease of transfer and
circulation for the shares.
Nevertheless, when Article 595 is concerned, regarding transfer
of the share capital of limited liability companies, we come to a
conclusion that these are not of a security nature. Article 595/1
of the new Turkish Commercial Code No.6102 provides that transfer
of partnership shares in limited liability companies cannot take
place in the form of a "share certificate transfer".
Procedures that result in the transfer of share capital and
transfer debt are realized in writing, where the signatures of the
parties are certified by a public notary. In other words, transfer
of partnership rights by "share certificate endorsement"
is not possible for limited liability companies. On the other hand,
Articles 489 and 490/2 of the Law provides that, in joint stock
companies, registered share certificates may be transferred by
endorsement, and the bearer shares may be transferred by delivery,
without being subject to any limitations.
Therefore, it should be accepted that share certificates of
limited liability companies are not securities. Then, the taxation
aspects of the matter should be briefly evaluated. The duplicated
Article 80 of the Income Tax Law provides that, proceeds from the
disposal of securities or other capital market instruments are
considered as taxable capital gains, except for those voluntarily
acquired and those that belong to fully obligated institutions,
which are held for more than two years. As a legal conclusion,
transfer of the shares of limited liability companies would not be
considered within the context of the exemption granted by the
duplicated Article 80 of the Income Tax Law, providing that
proceeds from the disposal of voluntarily acquired share
certificates and those that belong to fully obligated institutions,
which are held for more than two years, will not be considered as
capital gains and are therefore not subject to tax.
Originally published March, 2013.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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